Second from right, Andrea Barton Reeves, commissioner of the Connecticut Department of Social Services, appears on a panel in November in Washington, D.C., with other health leaders to talk about state work to fund social services amid federal cuts.
Photo courtesy Andrea Barton Reeves
When the Trump administration announced last fall during a government shutdown that it planned to abruptly freeze Supplemental Nutrition Assistance Program payments, state health officials across the U.S. were rattled.
In Connecticut, Andrea Barton Reeves, JD, commissioner of the state's Department of Social Services, scrambled along with other leaders to make sense of the ramifications. In Connecticut, about 10% of the state's population relies on support from the federal nutrition assistance program each month.
“It was full-blown panic and chaos,” Reeves told The Nation's Health. “A lot of it had to do with the uncertainty of the status of the information we were getting from our federal partners, which seemed to change almost hourly. That made it very difficult to navigate the ways in which we could inform people as to what the changes meant to them and what actions we could take as a state.”
The SNAP freeze, which ended after federal judges ordered the government to keep the program running, was another signal to states that America's safety net was in jeopardy under the Trump administration — and that states would need to find new ways to fund vital programs.
Over 41 million Americans are enrolled in SNAP, at an annual cost exceeding $100 billion. About 40% of participants are children. States oversee their programs and pay 50% of the administrative costs, while the federal government matches it. As of October, states will be on the hook for 75% of the administrative costs.
SNAP's actual food cost, known as benefits cost, is paid in full by the federal government, amounting to billions of dollars annually. But a federal budget bill passed last year requires states to pay up to 15% of benefits cost as of 2027.
The other major jump in state costs will be Medicaid, which provides health benefits to more than 70 million low-income people at a cost of over $900 billion a year. In recent years, the federal government's cost share has averaged 69%, in addition to covering 90% of costs for states that have expanded Medicaid under the Affordable Care Act.
But under the federal budget bill, states will assume more cost sharing for Medicaid, with federal funding reductions estimated to be nearly $1 trillion over 10 years. North Carolina projects a $40 billion loss of federal funding over that period, while California will lose $112 billion, for example.
States seeking new revenue lines
With states expected to pay millions or billions more apiece each year to keep programs such as SNAP and Medicaid operating, officials are seeking ways to raise dollars.
A federal budget bill passed last year will require states to start paying a greater proportion of SNAP costs, potentially endangering the health of millions of people.
Photo by Anut21ng, courtesy iStockphoto
Raising taxes may be the low-hanging fruit when it comes to filling coffers. In November, voters in Santa Cruz County, California, approved a sales tax increase to fund low-income healthcare in response to the Medicaid funding cuts made under a federal budget bill last year.
Some states are exploring wealth taxes over across-the-board tax increases because the latter can be an economic burden on low-income people, especially as the cost of living rises.
In California, lawmakers are considering a “fair share contribution” plan. A bill under consideration in the state Legislature would penalize large employers that do not offer paid health insurance to low-wage workers, many of whom enroll in Medi-Cal, the state's Medicaid program, for coverage. A tax on individuals who make more than $1 billion annually will also be on California's November ballot, which would raise taxes on the wealthiest through a one-time 5% tax to fund health care and education.
If adopted, the fair share bill is estimated to raise as much as $8 billion annually and the billionaire's tax is estimated to raise $20 billion each year over its five-year span, Laurel Lucia, MPP, deputy executive director of programs at the University of California-Berkeley Labor Center, told The Nation's Health.
Some states are also looking to make up lost revenue through taxes on sugary products. Washington state lawmakers are considering a tax on sodas and energy drinks that would take effect in 2028. Maryland lawmakers are considering a similar proposal.
In some states, budget reserves are helping to stabilize finances and maintain safety net programs. Though reserves cannot sustain programs indefinitely, they can buy time as governments restructure funding and state legislators draft bills that can help to generate income.
State reserves have been a roller coaster in recent years. Costs of the COVID-19 pandemic depleted surpluses, followed by replenished coffers from pandemic subsidies, followed by another depletion when subsidies ended. Delaware, Illinois, New Jersey, Rhode Island and Washington state are among the states that have exhausted their rainy-day funds, according to a March report from the Pew Charitable Trusts.
Connecticut is an exception, having built a budget surplus to address shortfalls from recession, federal budget cuts or both. In 2018, the state had almost no reserves. Today it has a rainy-day fund of $4.3 billion, which Pew ranks 13th among states, based on the days a state could fully operate using only its surplus. Connecticut could pay its bills for over two months through its rainy-day fund.
Budget belt tightening by two-term Gov. Ned Lamont and the Connecticut General Assembly are largely the reason for the turnabout, Reeves said.
Last November, the state unveiled a $500 million emergency fund carved from the budget reserves and earmarked for health, social and nutrition programs. Among allocations since January have been nearly $19 million for health and human services, $30 million for food banks, and $4 million for navigators to guide people through new SNAP and Medicaid regulations, Reeves said. The state also launched an information campaign for enrollees and set aside funding for the Low-Income Home Energy Assistance Program, which analysts say is on the chopping block in the 2026-27 federal budget.
Connecticut has also partially funded health insurance subsidies for marketplace plans. The state allocated $115 million through July 2027 to support most of the 140,000 customers buying coverage on Access Health CT, its health insurance marketplace.
But once surplus funds run out, cuts and reorganizations to Connecticut's safety net programs will be needed, Reeves said. That could mean ending and changing programs.
SNAP in Connecticut, for example, may have to be streamlined by reducing food choice, she said. enrollees currently have several food options. In the future, SNAP may operate more like a one-size-fits-all food bank.
“There may be less dignified ways in some people's minds that they get access to food, and it may feel less individual in terms of choice,” Reeves said. “But our overarching goal is to make sure that people have access — even if it isn't ideal — so that people don't go hungry.”
For more information, visit www.cbpp.org and https://itep.org.
- Copyright The Nation’s Health, American Public Health Association
